October 31, 2019 • By Xanat Hernandez
If you ask Professor Christopher Schwarz, associate professor of finance and faculty director for the Center for Investment and Wealth Management at The Paul Merage School of Business, weathermen exist to make economic forecasters look good. And if you ask Bill McBride, MBA ’91, creator of the blog Calculated Risk, it’s the other way around.
Luckily, attendees of the Newport Chamber of Commerce 2020 Economic Forecast were not looking for a ten-day weather forecast. Schwarz and McBride presented their predictions alongside President and Board Chair of MindOC Dr. Richard Afable to a sold-out audience which included Mayor Diane Dixon of Newport Beach and Mayor Katrina Foley of Costa Mesa. In addition to being a past CEO of St. Joseph Hoag Health, Afable is a member of the Merage School’s Dean’s Advisory Board and played a key role in launching an executive education course for healthcare clinicians and administrators at the School.
Schwarz predicted 1% to 1.5% growth in the GDP for 2020 and no recession for the next 12 months. He explained that while chances for significant economic growth are slim, there is no housing or stock market bubble.
“There’s always a chance there could be a recession,” he said during his forecast presentation. “But in my personal opinion, it takes something dumb and dumber for there to actually be a recession.” This remark was met with enthusiastic laughter as the movie poster for the 1994 comedy Dumb and Dumber flashed on the screens.
“And the reason there’s not going to be something dumb or dumber happening is that we have the Fed on our side,” Schwarz continued. “They’re here to come to the rescue, and you can’t fight the Fed.”
Schwarz ended his forecast with advice for businesses: “If I was a business today, the biggest thing you could to do protect yourself for the future is hoard good talent.”
He explained that with employment at an all-time high and with the lowest unemployment rate in 50 years, “everyone in the game is playing and no one is on the bench.”
McBride, a double UCI alumnus, is an economic analyst known for predicting the 2007 recession. He presented on economic and housing trends and also dismissed the existence of a housing bubble— “house prices might be a little elevated based on fundamentals, but there is very little speculation and there is no Bubble 2.0.”
Despite economic risk factors such as inflation, trade wars, tech stock declines and current immigration policy—he remains confident that there will be no recession.
“The trade war really isn’t big enough to negatively impact the economy and kick in a recession,” said McBride.
The forecast was moderated by President and CEO of the Newport Beach Chamber of Commerce Steve Rosansky.
“This year we more than doubled our attendance and sold out the venue due in no small part to our partnership with Chris Schwarz and the cooperation and support of The Paul Merage School of Business,” said Rosansky. “We have already booked Chris again for next year.”